Role of Fintech Companies in Strengthening the Banking and Online Payments Sector in Rural India

India’s FinTech market is among the fastest growing and is ranked as the third largest FinTech market globally with an expected market size of $150 billion by 2025. FinTech companies definitely have the potential to reshape the financial services and financial inclusion landscape in India in fundamental ways. FinTech companies have played an important role in improving access to the spectrum of financial services like AePS, Aadhar Pay, Remittances and Recharges for the masses. It has democratized digital payments and increased access to digital payments and online banking.

Gandhiji once said: “India’s soul lives in its villages.”. In fact, it is estimated that villages are where nearly three quarters of our population live. There is no doubt that The FinTech industry plies its route on the bumpy roads of rural Bharat. Right from demonetisation, India realized a need to adapt to technology and use digital payments. While the entire country was on the digitization path, rural India remained in the backseat due to lack of adequate commercial bank presence, with only 5% of the 600,000 villages having a commercial bank presence in 2019. Infrastructure costs, low usage due to lack of awareness, inconsistent availability of electricity, theft and vandalism are some of the major deterrents for physical bank branches and ATM operators in rural areas. Such challenges continue to slow down the delivery of basic banking services to this segment of the population. Slowly with the right resources and efforts of various FinTech companies, the rural population has also become well acquainted with the use of digital payment methods and banking services.

The financial security that comes with financial inclusion is one of the most important aspects required for a country to function smoothly. Over the years, technology has played an integral role in facilitating economic solutions and making them accessible to all, even in the most remote areas. Generally, these companies are create a banking model that is simpler, smarter and safer for its customers by simplifying finances with technology. FinTech companies have taken off services like online payments, money transfer, Aadhar Pay, mobile charging, bill payments and hotel and ticket bookings, among others, and has made them accessible even via mobile phones to the population living in remote areas. Companies today recognize the unique challenge in offering financial services to this segment and are therefore leveraging a network of entrepreneurs in SURU (semi-urban and rural) areas to offer assisted financial services.

The use of financial services has increased considerably after the penetration of FinTech platforms in rural areas. Even our Honorable Prime Minister Mr. Narendra Modi has always emphasized on the strengthening of digital services in India to move towards Atmanirbhar Bharat. Furthermore, the Government of India as well as the RBI have taken several steps to ensure the safety and security of digital payments in the country. RBI also observed “Financial Literacy Week” in February 2022, to spread the message of financial education among the public across the country. Very recently, Finance Minister Nirmala Sitharaman said that the future of finance in India is going to be driven through digitization. In July 2022 alone, 6.2 billion transactions worth Rs 10.6 trillion were completed.

Fintech in India has entered a whole new era with the exceptional increase in FinTech adoption rate in the country. The promising and aspiring FinTech sector in India is home to 20+ FinTech unicorns already and is poised to kick-start the game of financial solutions and providers in the coming years. This is ideally “Amritkaal from Fintech”.

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